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V3516-20 10 December 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · segunda entrega de edificaciones

Purchasing property from a real estate trading company may be subject to and exempt from VAT

A query was raised regarding whether the acquisition of property from a company dedicated to real estate trading is subject to VAT or to Transfer Tax (ITP/AJD). The Directorate General for Taxes (DGT) determines that if the transfer constitutes a second delivery of a building, it will be subject to and exempt from VAT.

The question raised

Liability of the supply for Value Added Tax or for Transfer Tax and Documented Legal Acts.

The DGT's ruling

The entity selling the real estate holds the status of a business person and its supplies are subject to VAT. If the real estate was acquired by the entity for subsequent sale, the transfer is considered a second supply of buildings, which is subject to and exempt from VAT. In this case, the operation is not subject to the modality of onerous transfers of property under the ITP and AJD.

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